Commentary:  Steve Roberts

Economic Growth: Capitalize On Positive Trends

The Charleston Gazette, July 12, 2004

The news that the state Supreme Court upheld the 2003 Workers’ Compensation reform legislation was a significant and positive development for job retention and creation in our state. I am pleased that the high court voted to affirm the action of the Legislature.

As anyone who worked on the reform package knows, the enactment of this package of reforms was the first major step in the long road toward restoring the financial stability of this beleaguered disability program. The second major step that has been taken involves the restoration of sound management and administrative programs within the fund. This has been done by the restructuring of the program’s oversight and management personnel and development of new policies to handle financial management, fraud abuse and claims administration.

Now, the third hurdle will be to devise “creative” solutions on how to address the fund’s massive long-term unfunded debt. This debt situation is staggering in terms of dollars — more than $3 billion. Given the fact that West Virginia’s comp costs are already the highest in the nation and a major detriment to new investment, business, labor and government need to look at ways to address this debt by first finding solutions to grow the state’s economy.

Economic growth and employment increases are the first priorities we should undertake in this examination of possible solutions. A key part of this answer lies in spurring economic growth and job creation, not in imposing higher costs on our existing businesses. To do that would surely worsen the present situation and send our state spiraling downward.

Among a few areas where our state should be focus its efforts — and dollars — in order to capitalize on positive trends are:

• Energy: Greater energy production (coal, natural gas, electricity, oil) equals more jobs and severance taxes, not to mention a multiplier effect from spurring service and support industries, professional services and the retail businesses in these counties. With energy prices currently at the high-end of the spectrum, our state should be working to help facilitate added production of our state’s vast natural resources. I believe we can increase production and create more high-paying jobs in this sector while still ensuring responsible protection of our environment and communities.
• Manufacturing: Nationally, this industry continues to reinvent itself and to come back stronger than ever. That is what needs to happen in West Virginia in order to help revitalize our struggling manufacturing businesses. West Virginia needs to address some of the critical issues facing this sector, such as liability reforms, environment permitting, and tax relief. The state’s manufacturing sector has been an integral part of West Virginia’s economy well before its founding, and the jobs and tax dollars it has provided are needed now as then. We can turn around manufacturing in this state, as many of our surrounding states have done.
• Tourism: The nation’s concerns about terrorism and higher gasoline prices make West Virginia an ideal tourist attraction for the eastern United States. The continued growth in our state’s tourism industry means jobs, sales taxes and consumer spending throughout our state. West Virginia should be using some of its economic development funds to help advertise the state as a nearby, safe, affordable, attractive and family-oriented tourism location. We also should be helping to spur new complementary tourism possibilities, such as the many golf courses that have sprung up across the state and the wildly successful Hatfield-McCoy trail system now bringing tourists into southern West Virginia.
• Health Care: West Virginia’s health care industry is a major growth industry, not only for state residents but also for this entire region. Health care facilities in our border counties have become significant economic engines to these communities and provide much needed high-paying jobs and opportunities. To further stimulate this industry, West Virginia should be looking to find additional federal dollars, such as the state’s 3-1 match for Medicaid funds. The state also has taken major strides recently to help leverage the intellectual capital and new business ideas (medical devices, biomedicine, etc.) that reside within these specialists in our state’s health care and research institutions. It is time now to capitalize on these entrepreneurial opportunities and to spur new industries from this homegrown expertise.
• Technology: West Virginia is creating the foundations for a vibrant technology industry by serving as an example of how to leverage new opportunities around existing business strengths. This is most evident in the biometrics industry that has blossomed around the FBI center and other resources in the Northcentral region. This approach is being replicated in other areas of our state, and we will all benefit from this new visioning and strategic development process.

West Virginia also needs to be creative in how it responds to new competition from states such as Pennsylvania when it comes to gambling revenues. Pennsylvania recently has authorized the installation of tens of thousands of video lottery machines. Revenues from the state’s lottery and gaming industries have helped to provide much needed revenues for important state programs, such as the Promise scholarship, education and tourism promotion. These funds have been devoted wisely to investments in our state’s future, and now we need to ensure that continues in order to prepare more West Virginia’s for the high-skill, intellectual needs of tomorrow’s economy.

As our state has been doing for decades now, we also need to maintain as a priority the continued investment in West Virginia’s infrastructure. Our roads, bridges, sewers, telecommunications and transportation systems are vital to business and industry of all types. Significant progress has been made over the past 30-40 years, and we need to focus our infrastructure dollars on those areas that will produce strong economic outcomes. A long-term state transportation plan surely would be advisable, as well as the broadband strategic plan that the Chamber is helping to create.

Few would disagree with me that enacting much needed reforms to eliminate “out of step” problems on business and spurring economic growth will provide added dollars to the state’s Treasury and the Workers’ Compensation program. However, I am unconvinced that we will close such a huge deficit entirely through these measures. The state may also need to look at implementation of some form of dedicated payroll surcharge, as was done back in the late 1980s to shore up the state’s Unemployment Compensation program.

All West Virginians — private-sector and public-sector workers — gain or lose when West Virginia’s economic climate is healthy or is ill. Now is the time for all to join together and be a part of the remedy so we have a firm foundation on which our state’s future can be built.

Opportunities abound for West Virginia as long as we face the facts and honestly present what West Virginia has to offer to those who will make investment and job decisions in the coming years. West Virginia needs to be “in balance” and to adopt a more flexible, active approach in order to respond to the dynamic forces that drive today’s domestic and international economies.

Roberts is president of the West Virginia Chamber of Commerce.